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View Diary: The goal IS to reduce the standard of living (386 comments)

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  •  Shoddy thinking (3.00)
    I want to jump all over the shoddy thinking I am reading in this diary. Not the shoddy thinking of Mr. Pearlstine -- the shoddy thinking of the reactions to his comments.

    In the first place, we do not have the actual transcript of his comments, we have a partisan interpretation of those comments. I am not saying that this interpretation is incorrect -- I am saying that we simply don't have his precise words so we don't have a basis for detailed analysis of his comments. We could use this report to make a few vague generalizations, but the detailed trashing going on here just isn't justified by the source information.

    Second, I find the whole conspiracy theory aspect of this discussion childish. Yes, there are plenty of evil, stupid people in this world -- Mr. Bush leaps to mind -- but to pin all the blame on a cabal of evil stupid people is wrong. I must confess, the current Republican government certainly provides the best evidence against my anti-conspiratorial claims, but we're not talking about Republicans, we're talking about businessmen.

    I certainly do not defend businessmen as virtuous -- I agree that they are grossly overpaid and deficient in moral fiber. Indeed, there was a wonderful article I read some months back about a criminologists who had developed a test for psychopathy, and when the test was given to business executives, they scored very high for psychopathy -- at a level just below that of the common criminal. Recall Ambrose Bierce's definition of a criminal as a businessman with insufficient capital.

    What this discussion overlooks is the power of the capitalist system to put a brake on the abuse of large numbers of people. For example, several people have pointed out that American workers are also consumers, and that to lower their standard of living will hurt the economy. I can assure you that economists and businessmen as a group are acutely aware of the fact that American consumers are driving the American economy, and much of the world economy right now. Indeed, the major concern here is that American consumers are spending too much and saving too little, putting a number of foreign economies in an unhealthy position of being TOO dependent on exports to America, while putting the American economy in the unhealthy position of being TOO dependent on foreign capital.

    The problem here is not intrinsic to the capitalist system, it arises from the abuse of the capitalist system by the American government. Under Republican control, the American government has twisted the capitalist system to favor the wealthy and to hurt the middle class. For example, corporations that abuse their pension plans are violating their contracts with their workers. In an honest capitalist system, the workers would haul the executives into court and sue them for every penny they own to get their pension contracts honored. But the government has made that impossible.

    Another very nasty example is the new bankruptcy law just coming into effect. When Americans realize just how slanted this law is against consumers, they will be furious. But again, this is not a failure of capitalism -- bankruptcy is a functional component of capitalism. The failure is in the laws that regulate capitalism. A particularly infuriating aspect of this new bankruptcy law is the comparison between this consumer bankruptcy law and American business bankruptcy law. America has the most generous business bankruptcy laws in the world, and that is considered to be an important factor in the success of the American economy. Business bankruptcy laws are very pragmatic, aiming to get the business or the businessman back in operation as soon as possible. But American consumer bankruptcy law is much more onerous than in other countries. The law is more punitive and makes no effort to help the consumer get back on his feet.

    The result of this is an acquaintance of mine who has $50K of credit card debt and is flooded with phone calls, half of which are nasty calls demanding that she pay her bills, and the other half of which are sales calls offering her new credit cards.

    So let's rise above this childish class warfare thinking and focus on the real cause: the government under Republican control.

    •  Good Points (none)
      In fact, if you go to the link included in the article above, you will see that the characterization of Pearlstine as "quite open that [what] the 'economy' needed now is a working class with a reduced standard of living that will compete with third world  labor" is at best an exageration.

      Pearlstine did say in response to one question that "it probably is not possible any more to graduate from high school and expect to have a middle class life" because of third-world competition for unskilled labor, but he also said "[t]he idea that the middle class has disappeared is just hokum."  Nor did he simply bat away suggestions that management bore some of the responsibility of the failures - he acknowledged that was true.  He even said that, while he did not believe Americans were ready to embrace a single-payer healthcare system, it may be a solution.

      In short, Pearlstine was misrepresented in this diary.  While I am not sure I agree with his take on things, he's been set up here as a straw man for a "class war" polemic.

      As I pointed out in another comment, though, Steve Miller of Delphi is making exactly the argument attacked by this diary - but he is making it for reasons that have nothing to do with reality and everything to do with perceptions.  Expect to see more diaries like this if Miller's PR campaign works.

    •  Sorry, boss (none)
      but you're wrong on a couple of counts. First, Republican control of the government, while it's a big roadblock to solving this problem, is not the problem. This is simply a continuation of a trend that began sometime in the 60s or 70s. Neither Carter nor Clinton did anything to reverse the trend, and in fact did things to accelerate it (deregulation, the way trade agreements are written, among other things).

      Second - this is a problem that's endemic to capitalism. One of the driving forces behind capitalism is reducing labor costs (what do you think "producitivity increase" means?). It makes no difference if the labor costs are reduced by product redesign, automation of production or offshoring jobs in search of the cheapest labor possible - the goal is to eliminate labor in all of its forms as far as possible. Capitalism has no interest in creating or sustaining jobs - it exists to provide return to capital.

      What has sustained capitalism so far is that economic growth driven by new technologies and new markets has been able to create more jobs net of the jobs capitalism destroys. However, advances in transportation technology, computer technology, design skills and attitudes. and communication technology among other factors along with the inevitable decrease in new product fields has tipped the balance to the point where there is now an accelerating decline in net jobs created in the US, especially jobs that pay well.

      I'm not an opponent of capitalism, or an advocate of capitalism or any other economic/political system. But lets not pretend that capitalism has as one of its goals the creation of decent jobs or living standards for the large mass of people. One need only look at the origins of capitalism in late 18th/early 19th century England (as Marx and Engels did) to see that's not the case. The present standard of living for most people in the middle class in the US is a historical accident created by the confluence of capitalism, war in Europe and poverty in the third world, and decidedly non-capitalist policies of the New Deal and the labor movement.

      Markets or "more capitalism" or democracy in and of themselves are not going to activate some invisible hand which will magically make these problems disappear and usher in Utopia. It's going to take addressing the actual problems and modifying or augmenting the system so that it does produce things like jobs and a decent standard of living for everyone in the country, not just the privileged elites.

      We all go a little mad sometimes - Norman Bates

      by badger on Thu Oct 13, 2005 at 10:22:59 AM PDT

      [ Parent ]

      •  Well, (none)
        I think where we disagree is in the logical leap you make from " One of the driving forces behind capitalism is reducing labor costs" to " the goal is to eliminate labor in all of its forms as far as possible."

        You are correct that the elimination of all costs -- capital costs, labor costs, and resource costs -- is the impossible dream of every business person. But it is an impossible dream, and every business person knows that. What really happens is that business people shave every cost they can -- including labor. So yes, business has no desire to create jobs or give fat raises to workers (including executives, in an ideal world).

        But that doesn't translate into They're Out To Get Us. The consumer is just as much "out to get" the business as the business is "out to get" the worker. The consumer ruthlessly, heartlessly, coldly spurns inferior or expensive product in favor of superior or inexpensive product. That destroys some businesses. But it also favors the businesses that do a better job of dancing to the consumer's tune.

        The capitalist consumer seeks to reduce the prices he pays to zero. He wants to pay $0.00 for his cars, food, houses, and clothes. He no more expects to enjoy that than the business expects to get its labor costs to $0.00

        •  The Impossible Dream (none)
          is one of my favorite songs from Man of La Mancha, and 30 years ago it would have been relevant to a discussion of economics. Today, nearly every capitalist can achieve their "labor-free" dream, more or less, given the availability of machines that work long hours without taking breaks, don't ask for pay raises, and don't unionize. It makes no difference whether those machines are gleaming-chrome or sweaty brown skin, or more often some combination of the two. I'll grant you can't eliminate labor completely, but there isn't a lot of difference between eliminating 90% or 100%.

          There's a program on the Science Channel called something "How Things Are Made". If you look at any of the segments, you'll be amazed at how few people you see in any of the production processes they cover. Particulary food or chemical products, the entire process is totally automated. That's where the productivity increases of the 90s, that Greenspan was so infatuated with, came from. That process (of eliminating labor) is just getting started in earnest now.

          I'm not suggesting we should pursue some policy of either Luddism (as "Luddite" is commonly understood) or the equivalent of the "featherbedding" that used to creep into union contracts. In fact I think we need to move full speed ahead on improving domestic productivity.

          However, there are things we can do in the near term to make US labor more competitive - things that don't require cutting middle-class wages or living standards. In the long term, though, we have to face up to the possibility that no government policy or private initiatives are going to guarantee the creation of enough jobs to support our labor force. Do we want a society similar to 19th century England where the occupational choices for most people are domestic service or petty thievery?

          I think you're only partially correct on the consumer's role, but that's a different subject.

          We all go a little mad sometimes - Norman Bates

          by badger on Thu Oct 13, 2005 at 11:45:34 AM PDT

          [ Parent ]

          •  Productivity growth (none)
            Productivity growth is a good thing, not a bad thing. How can you resent the idea of making more goodies for more people more cheaply? I can certainly support the idea that we are too materialistic and buy all sorts of crap that we don't need, but if that's what people want, I'm not going to block the doors of my local Wal-Mart.

            The task here is to have the labor force keep up with the economy. That means a more highly-educated labor force. The people getting screwed by free trade are the uneducated laborers whose jobs can be done just as well by a low-paid foreigner. There's a serious question to ask: why should the accident of where one was born grant one person wealth and another person poverty, when they both do the same job?

            My take on this: we've got to dramatically improve the educational standards in this society. Secondary education is no longer sufficient. We need to get everybody through college, and NOT by lowering our standards. Inhibiting free trade doesn't solve the underlying problem, it just postpones the inevitable.

            •  Wrong (none)
              First, I'm in favor of productivity growth - I'm just realistic about what it means: destroying jobs.

              Second, edcuating the labor force/uneducated laborers: you have a pretty low opinion of computer programmers, engineers, doctors (read pastordan's diary - the person went outside the country for medical care, and that's increasing), and even commerical jet mechanics (United's maintenance facility for its entire 777 fleet is in China).

              Tell me what major (other than nursing) my daughter should choose so she'll be guaranteed a high-paying job. Find some BLS statistic to support your choice.

              Here's a list you can start from - lots of education needed to fill those positions.

              We all go a little mad sometimes - Norman Bates

              by badger on Thu Oct 13, 2005 at 08:17:16 PM PDT

              [ Parent ]

      •  The thing that makes capitialism (none)
        bearable:

        "What has sustained capitalism so far is that economic growth driven by new technologies and new markets has been able to create more jobs net of the jobs capitalism destroys."

        --I disagree.

        What sustains capitalism are the "social democratic" mechanisms such as those implemented by the New Deal and those implemented in places like Germany and France:  Strong Labor unions, Progressive taxation, free health care, labor protections, quality public education.  Such things have acted as buffers to the tendancy in a capitalist system of taking all the wealth of the society and letting it accumulate at the very top.  In effect, they collectively act to redistribute the wealth of a society to a larger swath of the population, and thus create and sustain a real middle-class.  Thus, they ameliorate to a great deal the harsh and unjust effects of a capitalist system.

        Hence, the idea that Roosevelt's New Deal "saved" capitalism.

        Also, the idea of tarriffs and protecting markets used to be important.  That is, until the "free marketers" started brainwashing Americans and others that tarriffs were a bad thing, America had "protectionist" legislation and made no apologies about it.

        Well, when you take tarriffs off, then a company has no disincentive to prevent it from moving production oversees where the labor is cheaper and there are no environmental standards.  A tarriff was supposed to confiscate from the capitalist that marginal benefit he hoped to enjoy by hiring the labor of other less developed countries.  When you take such things away, then instead of encouraging poorer countries to come up to our levels, you reduce the developed countries down to the lowest world-wide standard instead.

        What we are seeing today is merely the latest episode of a 30+ year history by corporate America to destroy the standards of living of the American middle-class.  These things started during the 70s when American companies first began to move jobs oversees.  Things like tax cuts for the rich, the destruction of unions, NAFTA, the WTO, de-regulation, have basically set in motion the forces that have drastically reduced the standards of living of the American middle-class.

        But, common Americans have gone along with all this bullshit.  They've let themselves be propagandized by the powers-that-be, and have ended up supporting politicians of both parties that have helped such things come about.  In this, they have been complicit in their own rape and destruction.

        And the way that the politicians usually convince Americans to buy into this shit is through lies, and by misdirection by getting them focused on such things as abortion rights issues (both pro and con), "moral" issues, religious right issues, and an appeal to a blind 'patriotism/nationalism."  

        Too bad.  In the end, the people have fucked themselves.

        •  Different subject (none)
          "Sustained capitalism" was pretty inaacurate. What I meant was "what allowed capitalism to be a net creator of jobs". Expanding markets created more jobs than they destroyed - at least after WW II.

          I agree completely with your take on redistribution, and any solution (short of putting most of the population in poverty) is going to entail a large amount of redistribution of wealth.

          I'm not sure that tariffs are a viable solution now - at least not across the board. One way to redistribute wealth is to have the wealthy pick up more of the tab that gets tacked on to labor right now. Working people effectively pay 15.3% FICA, 5% or so for unemployment insurance, plus health premiums for those who have insurance - that's all part of "wages" or labor cost for an employer.

          We all go a little mad sometimes - Norman Bates

          by badger on Thu Oct 13, 2005 at 12:30:56 PM PDT

          [ Parent ]

    •  Question (none)
      You write:
      The problem here is not intrinsic to the capitalist system, it arises from the abuse of the capitalist system by the American government. Under Republican control, the American government has...

      Isn't it possible that the reason we are currently "under Republican control" is because of failings in the combination of the capitilistic system combined with a form of government where to have money means to have political power.  (Money = the power to get elected or lobby/bribe the elected.)
      And because of the structure of our government/consititution, once the plutocrats get into power, they can change the system to stay there forever (no matter what they call themselves... Republican or Democrat.)

      Life is like this analogy...

      by shock on Thu Oct 13, 2005 at 10:32:17 AM PDT

      [ Parent ]

      •  Yes (none)
        The problem is that our government makes it possible for rich people to exert greater influence than poor people. That's not capitalism's fault -- the very concept of justice is the notion of protecting the weak from the powerful. Our political system is getting worse at delivering justice. Businesses are energetically and enthusiastically taking advantage of that flaw in our political system. The solution is to fix the political system, not attack business.
    •  What you are missing, Erasmussino, (none)
      is that there is planned class warfare, whether, global (PNAC) and Trade Agreements (?) like NAFTA and CAFTA, to onerous "intellectual" property laws (Copyrights and patents extending 40-50 years, for what ? Yee gods!), the great reactionary think tanks, designed to effectuate the implementing of and legislating of class warfare, the dishonest Gingrich Contract for America, Harry and Louise, K Street.

      Oh, the list is not worth running.

      Suggestion Erasmussino.

      Turn of the TV and look out the window.

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